(Reuters) — Avon said on Thursday it may cost as much as US$132 million to settle a bribery investigation into the beauty products company's efforts to develop new markets overseas.
Avon cautioned there were no assurances it would reach a settlement and if it does, the company could not estimate its timing.
The United States Securities and Exchange Commission and the Department of Justice began an investigation in 2011, following an internal probe by Avon that started in 2008 into allegations of improper payments in China.
The world's largest direct seller of beauty products also reported lower-than-expected fourth-quarter revenue, as business fell in emerging markets that had been a source of growth for the beauty company as its North American business waned.
Revenue dropped 10 per cent to US$2.67 billion, while analysts expected US$2.75 billion, according to Thomson Reuters I/B/E/S. Excluding the impact of foreign exchange, sales fell four per cent.
During the quarter ended Dec. 31, Avon, a direct seller of beauty products, sold 10 per cent fewer items, and the size of its sales force shrank five per cent after showing signs of stabilizing earlier in 2013.
Chief executive Sheri McCoy, who took the reins almost two years ago with a promise to turn around the company, said in a statement, "Much works remains to be done."
Avon, famous for decades in North America for its army of "Avon Ladies" sales representatives, has in recent years bet on emerging markets for growth.
But business fell in three major markets — Mexico, Russia and China. In North America, Avon's business continued to degenerate, with sales of beauty products down 25 per cent, and with 17 per cent fewer representatives. In China, sales fell by half.
A bright spot was Brazil, Avon's top market, where sales rose six per cent, stripping out the impact of foreign exchange.
Avon's net loss narrowed to $69.1 million, or 16 cents per share, from US$162.2 million, or 37 cents per share.
Avon sought to settle the U.S. probe with an offer to pay US$12 million, but regulators wanted a "significantly greater" amount, the company said in October.
The company has already spent about US$300 million on its internal probe.
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